Low mortgage rates and affordable homes after the housing-bubble are attracting many buyers - especially the millennials, who are newly into a job, and are frustrated due to the ever increasing house rents. Today, a single apartment condo in downtown NY costs anywhere between $1,500 to $5,000.
Owning a home is a good investment that pays back. Simply because the monthly mortgage payments you make increase the home equity and the rising home values ultimately add to your asset. Unfortunately, there are other hidden costs too of buying a home rather than just the mortgage payments, and those that the seller often don’t reveal.
- Inspection and appraisal fees: Before you purchase a home, you’re required to pay for home inspection, an appraisal and perhaps additional inspections for pests or radon. These are mandatory expenses that need to borne by the buyers. Appraisals and inspections are necessary so that you don’t end up buying a disputed property or paying too much.
- Closing costs: You may perhaps try to negotiate with your seller to pay for these costs, but you need to be ready with the cash as if the negotiation fails, you’d have to pay anywhere from 2% to 4% of the mortgage balance depending on your area.
- Property taxes: If you feel proud to be a homeowner, you’ll also have to pay for retaining the pride. As a homeowner, you need to pay property taxes, which are usually part of the escrow you pay into each month. even if you’ve a fixed-rate home loan, your property taxes can go up with time.
- HOA and condo fees: If you’re purchasing a home within a condo or homeowners’ association, you’ll be required to pay a monthly or quarterly maintenance cost. These fees can vary based on the numbers of owners or the locality you live in.
- Homeowners’ insurance: If you’re purchasing a home on a loan, your lender will ask for a homeowners’ insurance policy, which could be costly depending on a variety of factors including the location and the materials used to construct the building. The insurance costs will also rise with time, and you’d have to pay for supplemental insurance if you live in a zone affected by earthquake or flood.
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